Barclays board the focus of $500m secret fees

Qantas chairman Leigh Clifford says investigations by the UK Financial Conduct Authority, the Serious Fraud Office, the US Department of Justice and the Securities and Exchange Commission into Barclays are “not a Qantas matter, nor is it a matter levied against me personally”.
Photo: Bohdan Warchomij

Corporate governance advisers say directors of Barclays bear the ultimate responsibility for controversial capital-raisings now the centre of UK and US investigations over revelations the British bank paid secret fees of more than $500 million.

The comments raise pressure on
Qantas
chairman
Leigh Clifford
, who was a director of Barclays at the time, to explain what the board was told about two deals to raise £9.2 billion in 2008 from the sovereign wealth fund of Qatar and a member of Abu Dhabi’s ruling family, Sheikh Mansour Bin Zayed Al Nahyan.

“There isn’t a shadow of a doubt the [Barclays] board was all over this," Aaron Bertinetti of proxy adviser CGI Glass Lewis said on Wednesday.

“Barclays has denied any wrong­doing and has said it will strenuously defend the claims against it," Mr ­Clifford said in a statement on Wednesday afternoon: “There is no suggestion that the Barclays board or any individual director acted improperly."

He said the investigations by the UK Financial Conduct Authority, the Serious Fraud Office, the US Department of Justice and the Securities and Exchange Commission were “not a Qantas matter, nor is it a matter levied against me personally". It had “no bearing on my role as Qantas chairman".

Mr Clifford said he was restricted in what he could say because of the on­going investigations.

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Barclays has previously said the advisory services agreements under which the fees were paid over five years were legitimate and did not need to be disclosed. A Barclays report earlier this year said the bank announced it was paying £300 million in fees in October 2008.

Earlier, Senator Xenophon said Mr Clifford “needs to explain to Qantas shareholders what he knew about those ‘advisory payments’ and explain what involvement, if any, he had in authorising them."

“The duties of a director in the UK are as onerous in the UK as they are in ­Australia," Mr Xenophon said. “As a director of Barclays, Mr Clifford should have known about all the payments associated with the Qatar ­capital-raising."

Mr Bertinetti said that any type of placement had to be approved by the board.

“You have to assume they did the right thing but because of the size, the timing in the middle of the GFC and the controversy at the time – and in the middle of the GFC Barclays was in a hell of spot – there’s no doubt the board knew all about this, if it is as reported."

Capital-raisings were different from operational matters and fell directly within directors’ undelegated authority, Vas Kolesnikoff, of Kolesnikoff ­Governance, said.

“Directors like Mr Clifford cannot pretend that they either did not know about the fees or that they were reasonable," Mr Kolesnikoff said.

Proxy adviser ISS executive director Ulysses Chioatto said directors were in the firing line on a number of fronts when issuing securities.

“A board of directors must disclose details of the placement," he said.

Another former Barclays director now on an Australian-listed board is the bank’s former chief executive
John Varley
, now senior independent director on the
Rio Tinto
board.

A spokesman for Rio declined to comment on Wednesday.

In London, Barclays’ chief compliance officer, Hector Sants, who until last year headed the Financial Services Authority that began the investigations of Barclays, has taken leave of absence suffering exhaustion and stress.

The FCA, which succeeded the FSA earlier this year, imposed a £50 million fine on Barclays in a Warning Notice issued on September 13, after it found that Barclays had not disclosed £322 million ($542 million) in fees paid under two “advisory services agreements" made in 2008.

The deal was put together by a colourful London-born private banker, Amanda Staveley, who once ran a cafe in Newmarket and is an ex-girlfriend of Prince Andrew.

The influential banking journal Euromoney reported earlier this year that while Barclays reported that £110 million in fees were paid to Sheikh Mansour, in reality the money was more widely distributed. This included £29.5 million paid to Staveley.